OnLive’s demise and what it means for Ouya’s future

By now some of you will have heard of the untimely demise of the cloud gaming platform and cloud desktop solution OnLive. It offered games stored, rendered and synchronized on a remote server and delivered via the Internet to your console at home. When it was first released, it was touted that OnLive would be the demise of consoles and handheld, but those who looked into their crystal ball and predicted this seemed to have gotten it completely wrong. As of August 2012, the company has laid off all of its 200 employees with the exception of its CEO, Steve Perlman. Through a corporate statement he did say that some of them would be hired back and others offered consultation jobs.


What a douchebag. Apparently there was an alternative that would have saved all of the employees’ jobs and allowed the company to stay in business, but as any good CEO does he screwed over his employees to get a more lucrative deal for himself and the company. Seeing how he is still CEO and all. Now 200 families are sitting without work or an income. Luckily for them Gaikai, another streaming game company, has come to the rescue and is trying to hire the people who were laid off from OnLive. Kudos to them for stepping up and helping out these people – seems for every Douche-bag CEO there is at least another company willing to help.

It also seems that Onlive as a debt of between 30 and 40 million dollars. That is some serious pocket change right there. It’s also estimated that investors will only see 5-10% of their money back on any share purchases they made in the company. Some of those investors include Taiwanese mobile phone maker HTC, which said that it was writing off a $40 million loss on the company, and British Telecom who said it was “highly likely” it would have to write off its 2.6 percent ownership in OnLive. Some of the employees also reportedly lost millions of dollars in stock equity in the company through the magic of the “restructuring”.


Now, you may ask why Onlive failed. The answers are rather simple; the first reason would be that the company has simply been too ambitious. OnLive is playable via Mac and PC, as well as multiple smartphone and tablet devices. In addition to this they also produced and distributed their own ‘console’ so customers could play their games via a television. That’s a lot of bases to cover for such a small company, so in essence they aimed too far and totally missed their target. The second reason would be giving out huge amounts of free hardware to build their userbase on. Apparently at the Eurogamer event (In the UK) last year they handed out free consoles and people queued around the block, and yet it appears almost no one in the UK uses OnLive.

And, last but not least, when you look at the games provided by the Onlive service, the games were more often than not older titles, with only a few AAA blockbusters in-between. There’s also absolutely no support from Activision, EA or Ubisoft – the 3 largest third-party publishers in the world. If you’re trying to market your console without the support of the big three, you might as well be dead in the water. The problem with Onlive was that it failed to find a unique service or platform that would make you go “I need to use this service”. Onlive was pitching convenience. No more discs, no lengthy download – just quick access to the games you wanted.


The problem was that those quick to access games were ones that no one wanted to play or were already 2-3 years old. Not to mention they had nothing that set them apart from the big boys. They were going up against the likes of Sony, Microsoft and Nintendo, not to mention the PC, which had exclusive titles like Uncharted, Gears of War and Mario. They were going up against those platforms with no exclusive content or anything that would have set them apart from those 4 big platforms. Their marketing strategy just didn’t appeal to me and, it seems, to the rest of the gaming community out there, so they were stuck dead in the proverbial sea of possibilities.

So what, you ask, does this mean for OUYA? Sure, they were possibly the most successful kick-starter to ever surface on the internet. Sure, the concept and idea behind it is amazing and we have heard loads of trash talk as well as support for it, and seen some lovely concept art which shows us what it could look like, but other than that nothing that would make it stand out from the crowd, nothing that would make it rub shoulders with all the big boys in the gaming industry. Because, let’s face it, the gaming industry is highly competitive. You either jump in swimming or immediately sink to the bottom, and the people behind OUYA could stand to learn a few lessons from what has happened with Onlive.

Dev KitThe video game industry is littered with examples of how not to run a company and market your products, but like most things in history, and human nature for that matter, we are doomed to repeat the same mistakes over and over again. Until that day comes I don’t see any other console or piece of hardware competing with the big 4 platforms that are available on the market today.

[Editorial Note:] This was a article I originally wrote for eGamer.

About larch

I am a cucumber in a fruit bowl.
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4 Responses to OnLive’s demise and what it means for Ouya’s future

  1. Pingback: OnLive is dead | Suitably Bored

  2. larch says:

    OnLive was a stupid idea. It is so flawed and financially unachievable, The problem with how the implementation is that it is not scalable. The cost in hardware alone would stagger any company. Imagine if you have 100k users concurrent that means you need 100k individual systems for them on top of whatever the infrastructure is. It’s not sustainable unless you virtualize. Problem is the current state of hardware technology simply has not outpaced software yet. There is no cost-effective way to setup one system for multiple users running AAA titles (e.g. Witcher 2).

    The flaws: building highly specialized data centers all around the world in the hopes that people will pay money to play games on them. The assumption that people who play the kind of games that go beyond bejeweled or angry birds do not want to pay for the hardware to play on.
    Where the financials breakdown: when a run-of-the mill tablet, smartphone or second-hand console offers a much better gaming experience at similar cost of an OnLive subscriptions + the games.

  3. Paul says:

    To all those reading this article, please be aware that Onlive is not dead. It has not suffered “an untimely demise”. It has gone into administration, but it has also been bought by a new company which is keeping the service running and has its own plans for the future

    The service is still up and running, games are running well and there are no plans from what I can see of the service stopping in the future.

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